reportable in the supreme court of india …. these sixteen appeals arise from the judgments of...
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REPORTABLE
IN THE SUPREME COURT OF INDIACIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1942 OF 2009(Arising out of S.L.P. © No. 22704/2005)
Bank of India & Anr. .. Appellants
VersusK. Mohandas & Ors. ..Respondents
WITH
CIVIL APPEAL NO. 1943 OF 2009(Arising out of S.L.P. © No. 18215/2006)
N.U. Kurup & Ors. .. AppellantsVersus
Union Bank of India & Ors. ..Respondents
WITH
CIVIL APPEAL NO. 1944 OF 2009(Arising out of S.L.P. © No. 19463/2007)
Punjab & Sind Bank & Ors. .. Appellants
Versus
Baldev Singh ..Respondent
WITH
1
CIVIL APPEAL NO. 1945 OF 2009(Arising out of S.L.P. © No. 14406/2007)
Punjab & Sind Bank & Ors. .. Appellants
Versus
Baldev Singh ..Respondent
WITH
CIVIL APPEAL NO. 1946 OF 2009(Arising out of S.L.P. © No. 8772/2008)
Sr.Regional Manager, Punjab National Bank .. Appellant
VersusC.J. Singh & Ors. ..Respondents
WITH
CIVIL APPEAL NO. 1947 OF 2009 (Arising out of S.L.P. © No. 8902/2008)
Punjab National Bank .. Appellant
Versus
Balwant Rai Girdhar & Ors. ..Respondents
WITH
CIVIL APPEAL NO. 1948 OF 2009 (Arising out of S.L.P. © No. 9029/2008)
Punjab National Bank .. Appellant
VersusAnita Garg & Anr. ..Respondents
2
WITH
CIVIL APPEAL NO. 1949 OF 2009 (Arising out of S.L.P. © No. 10846/2008)
Punjab & Sind Bank & Ors. .. Appellants
VersusRanbir Singh & Ors. ..Respondents
WITH
CIVIL APPEAL NO. 1950 OF 2009 (Arising out of S.L.P. © No. 11112/2008)
Punjab & Sind Bank & Ors. .. Appellants
Versus
Gurcharan Singh Rein & Ors. ..Respondents
WITH
CIVIL APPEAL NO. 1951 OF 2009(Arising out of S.L.P. © No. 11114/2008)
Punjab & Sind Bank & Ors. .. Appellants
Versus
Harminder Singh & Ors. ..Respondents
WITH
3
CIVIL APPEAL NO. 1952 OF 2009(Arising out of S.L.P. © No. 11115/2008)
Punjab & Sind Bank & Ors. .. Appellants
Versus
Kulbir Singh Bhatia ..Respondent
WITH
CIVIL APPEAL NO. 1953 OF 2009(Arising out of S.L.P. © No. 11190/2008)
Punjab & Sind Bank & Ors. .. Appellants
VersusArvinder Kaur Bedi ..Respondent
WITH
CIVIL APPEAL NO. 1954 OF 2009(Arising out of S.L.P. © No. 11324/2008)
Punjab & Sind Bank & Ors. .. Appellants
Versus
Bhupinder Singh Sachdeva & Ors. ..Respondents
WITH
4
CIVIL APPEAL NO. 1955 OF 2009 (Arising out of S.L.P. © No. 13428/2008)
Punjab & Sind Bank & Ors. .. Appellants
Versus
Chanan Singh Sidhu ..Respondent
WITH
CIVIL APPEAL NO. 1956 OF 2009(Arising out of S.L.P. © No.23585/2005)
Subhas Chandra De & Ors. .. Appellants
Versus
United Bank of India & Ors. ..Respondents
AND
CIVIL APPEAL NO. 1957 OF 2009(Arising out of S.L.P. © No. 8050/2006)
Amitava Mitra & Ors. .. Appellants
Versus
Zonal Manager,Punjab National Bank & Ors. ..Respondents
J U D G E M E N T
R.M. LODHA, J.
Leave granted.
5
2. These sixteen appeals arise from the
judgments of Punjab and Haryana High Court,
Calcutta High Court and Kerala High Court and
relate to different banks but since the common
issues are involved, it is appropriate that these
appeals are dealt with and disposed of by the
common judgment.
3. In the month of May, 2000, Government of
India, Ministry of Finance (Banking Division), advised the
nationalized banks to carry out detailed manpower
planning as these banks were found to have 25% of its
manpower as surplus. A Human Resource Management
Committee was constituted to examine the said issue and
to suggest suitable remedial measures. The committee so
constituted observed that high established cost and low
productivity in public sector banks affect their profitability
and it was necessary for these banks to convert their
human resources into assets compatible with business
strategies. Inter alia, the committee placed the draft
Voluntary Retirement Scheme with the Central
Government that would assist the banks in their efforts to
6
optimize their human resources and achieve a balanced
age and skills profile in keeping with their business
strategies. With the approval of the central government,
Indian Bank Association (IBA) circulated salient features
of the draft scheme to the nationalized banks for
consideration and adoption by their respective boards vide
its letter dated August 31, 2000. The Board of Directors of
each of the nationalized banks, keeping in view the
objectives, considered the draft scheme and adopted it
separately.
4. In the present batch of appeals, the Voluntary
Retirement Scheme brought out by the Punjab National
Bank, Punjab & Sind Bank, Bank of India, Union Bank of
India and United Bank of India is in issue.
5. The scheme adopted by these banks, although
separately, is identical and bears similar salient features
with some variation in certain respects. It is not
necessary to consider them individually. For the sake of
brevity, we shall refer the scheme as VRS 2000.
6. The objective of VRS 2000 has been:
7
-to transform the organizational as more efficient aswell as for controlling operational costs;
-to improve the prospects and career growth andskills upgradation for employees by rationalizing themanpower;
-to help the bank to rightsize the growth.
7. We may, at this stage, summarise the salient
features of VRS 2000. These are :
(i) All permanent employees of the bank who haveput in minimum 15 years of service or completed 40years of age on the date of coming into force of thescheme are eligible for voluntary retirement.
(ii) In addition to the normal retirement benefitsavailable to an employee , according to the termsand conditions of his employment in the bank, anemployee whose application for voluntary retirementis accepted will be paid a lump sum amountequivalent to 60 days salary for each completedyear of service.
(III) The competent authority may accept or rejectthe application of an employee for voluntaryretirement and the decision of the competentauthority shall be final.
(IV) No voluntary retirement shall come into effectunless competent authority has passed ordersaccepting the applications of the employees toretire voluntarily under the scheme.
(V) The scheme can be withdrawn at thediscretion of the bank at any time withoutassigning any reason.
(VI) It shall be open to the bank to alter/amend theconditions of the scheme. (In the schemeframed by Punjab National Bank suchprovision is not there).
8
(VII) The applications made under the scheme willbe irrevocable and the employee will not havethe right to withdraw the application oncesubmitted.
(VIII) An employee whose application for voluntaryretirement is accepted and relieved from thebank shall be eligible for :
(i) gratuity as per Gratuity Act/service gratuity asthe case may be;
(ii) own contribution of provident fund and bankcontribution towards provident fund, in case of thosewho have opted for Contributory Provident Fund orown contribution of provident fund and pension interms of Employees Pension Regulations, 1995, incase of those who have opted for pension and haveput in 20 completed years of service in the bank(emphasis supplied) and
(iii) leave encashment as per rules.
8. The period during which VRS 2000 was to
remain in operation in respect of the banks with which
we are concerned is as follows:
Punjab and Sind Bank 01.12.2000 to 31.12.2000
Punjab National Bank 01.11.2000 to 30.11.2000
Bank of India 15.11.2000 to
14.12.2000
Union Bank of India 01.12.2000 to 31.12.2000
9
United Bank of India 01.01.2001 to 31.01.2001
9. Section 19 of the Banking Companies
(Acquisition and Transfer of Undertakings) Act, 1970 (for
short ‘ Act 1970’) empowers the Board of Directors to
make regulations consistent with the provisions of the Act
or any Scheme made thereunder after consultation with
the Reserve Bank and with the previous sanction of the
Central Government in respect of matters provided therein.
Section 19 (2)(f) reads thus:
“(2) In particular, and without prejudice to thegenerality of the foregoing power, the regulations mayprovide for all or any of the following matters, namely:-- (f) the establishment and maintenance ofsuperannuation, pension, provident or other funds forthe benefit of officers or other employees of thecorresponding new bank or of the dependants of suchofficers or other employees and the granting ofsuperannuation allowances, annuities and pensionspayable out of such funds.”
10. These banks have made their regulations in
respect of pension separately. Since they bear identical
provisions; we shall refer them as Pension Regulations,
1995 generally. On the date of the commencement of the
VRS 2000, Regulations 28 and 29 read as follows:
10
“28. Superannuation Pension:-
Superannuation pension shall be granted to anemployee who has retired on his attaining the age ofsuperannuation specified in the Service Regulations orSettlements.
29. Pension on Voluntary Retirement:-
(1) On or after the 1st day of November, 1993 atany time, after an employee has completed twentyyears of qualifying service he may, by giving notice ofnot less than three months in writing to the appointingauthority retire from service.
Provided that this Sub-regulation shall not applyto an employee who is on deputation or on study leaveabroad unless after having been transferred or havingreturned to India he has resumed charge of the post inIndia and has served for a period of not less than oneyear:
Provided further that this Sub-regulation shallnot apply to an employee who seeks retirement fromservice for being absorbed permanently in anautonomous body or a public sector undertaking orcompany or institution or body, whether incorporated ornot to which he is on deputation at the time of seekingvoluntary retirement;
Provided that this Sub-regulation shall not applyto an employee who is deemed to have retired inaccordance with Clause (1) of regulation -2.
(2) The notice of voluntary retirement given undersub-regulation (1) shall require acceptance by theappointing authority:
Provided that where that appointing authority does notrefuse to grant the permission for retirement before theexpiry of the period specified in the said notice, theretirement shall become effective from the date ofexpiry of the said period.
(3)(a). An employee referred to in sub-regulation (1)may make a request in writing to the appointingauthority to accept notice of voluntary retirement of lessthan three months giving reasons therefor.
11
(b) On receipt of a request under Clause (a), theappointing authority may, subject to the provisions ofSub-regulation (2) , consider such request for thecurtailment of the period of notice of three months onmerits and if it is satisfied that the curtailment of theperiod of notice will not cause any administrativeinconvenience, the appointing authority may relax therequirement of notice of three months on the conditionthat the employee shall not apply for commutation of apart of his pension before the expiry of the notice ofthree months.
(4) An employee, who has elected to retire underthis regulation and has given necessary notice to thateffect to the appointing authority, shall be precludedfrom withdrawing his notice except with the specificapproval of such authority;
Provided that the request for such withdrawal shall bemade before the intended date of his retirement.
(5) The qualifying service of an employee retiringvoluntarily under this regulation shall be increased by aperiod not exceeding five years, subject to the conditionthat the total qualifying service rendered by suchemployee shall not in any case exceed thirty threeyears and it does not take him beyond the date ofsuperannuation.
(6) The pension of an employee retiring under thisregulation shall be based on the average emolumentsas defined under clause (d) of regulation 2 of theseregulations and the increase, not exceeding five yearsin his qualifying service, shall not entitle him to anynotional fixation of pay for the purpose of calculatinghis pension.”
11. It appears that the benefits provided under
Regulation 29 were not found to be attractive by the
employees and did not help these banks in rightsizing
12
their manpower; thus, arose a necessity of special
scheme. VRS 2000 is, in a way, special scheme
launched for a very limited period.
12. VRS 2000 came up for consideration before
this Court in the case of Bank of India & Ors. vs O.P.
Swarnakar & Ors., (2003) 2 SCC 721. The question
under consideration in that case was whether an
employee who opts for voluntary retirement pursuant to or
in furtherance of a scheme floated by the nationalized
banks would be precluded from withdrawing the said offer.
This Court culled out the following aspects:
(i) The banks treated the application from theemployees as an offer which could be accepted orrejected.
(ii) Acceptance of such an offer is required to becommunicated in writing.
(iii) The decision-making process involvedapplication of mind on the part of several authorities.
(iv) Decision-making process was to be formed atvarious levels.
(v) The process of acceptance of an offer made byan employee was in the discretion of the competentauthority.
(vi) The request for voluntary retirement would nottake effect in present but in future.
13
(vii) The bank reserved its right to alter/rescind theconditions of scheme.
13. In O.P. Swarnakar, it has been held that
scheme is contractual in nature. It amounted to an
invitation to offer and not an offer or proposal itself; the
application made by the employees was an offer.
14. The statement of law with regard to nature of
voluntary retirement scheme expounded in O.P.
Swarnakar has been reiterated in HEC Voluntary Retd.
Employees Welfare Society v. Heavy Engineering
Corporation Ltd. (2006) 3 SCC 708; albeit a different
voluntary retirement scheme.
15. The admitted factual position in this batch of
appeals is that each of the employees had completed 20
years of service.
16. It may be noticed that at the fag end of the
operation of VRS 2000, at the instance of IBA and with
the approval of the Central Government, Regulation 28
was proposed to be amended. The amendment in fact
14
was carried out in the year 2002 with retrospective effect
from September 1, 2000. By way of amendment, a proviso
has been inserted to Regulation 28, which reads as
follows:
“Provided that pension shall also be granted to anemployee who opts to retire before attaining the age ofsuperannuation, but after having served for a minimumperiod of 15 years in terms of any scheme that may beframed for the purpose by the Bank’s Board with theconcurrence of the Government.”
17. The optees have been given retiral benefits by
the respective banks under VRS 2000 save and except
the benefit of pension under Regulation 29(5). Their
representation in this regard did not yield any result and
that necessitated them to approach various High Courts
for redressal of their grievance.
18. The views of High Courts differ. Punjab and
Haryana High Court has held that employees are entitled
to add a period of qualifying service not exceeding five
years in terms of the Regulation 29(5); the total qualifying
service rendered by an employee seeking voluntary
retirement in any case shall not exceed 33 years. With
15
regard to the amendment in Regulation 28, Punjab and
Haryana High Court has held that by the said amendment,
the provision contained in Regulation 29(5) of the
Regulations does not get affected so as to disentitle the
employees the benefit provided therein.
19. There are two views in so far as Kerala High
Court is concerned. In the case of K. Mohandas (Civil
Appeal arising out of SLP (c) 22704/2005), the Division
Bench in the Writ Appeal held that the employees seeking
voluntary retirement under VRS 2000 were entitled to
benefit under Regulation 29(5) of Pension Regulations,
1995. However, in the case of N.U. Kurup, the single
Judge held otherwise. The single Judge took the view
that the employees seeking voluntary retirement under
VRS 2000 were entitled to pension under Regulation 28
and that they are not entitled to benefit of addition of five
years service as provided in Regulation 29(5). The view
of the Division Bench of Calcutta High Court is on the
lines of the view of the single Judge of Kerala High Court
that the optees of voluntary retirement under VRS 2000
16
are not entitled to benefit of addition of five years service
under Regulation 29(5).
20. We have heard the senior counsel, counsel for
the respective parties and Baldev Singh who appeared in
person at quite some length. The written submissions
have also been filed by the parties which we considered
thoughtfully.
21. The submissions on behalf of the banks may
be summarised thus : (i) that Pension Regulations, 1995,
as were existing during the operation of VRS 2000, did
not cover the class of employees retiring under the
Scheme which is contractual in nature. Regulation 28
came to be amended by insertion of proviso thereto to
cover the employees retiring under the Scheme inasmuch
as by the said amendment, the employees having
completed 15 years of service or more became entitled to
pension on pro-rata basis; (ii) that voluntary retirement
under VRS 2000 cannot be compared or equated with
voluntary retirement under Pension Regulations, 1995.
VRS 2000 is completely different and distinct scheme
from voluntary retirement contemplated under Regulation
17
29 of the Pension Regulations, 1995; (iii) that Regulation
29(5) of Pension Regulations, 1995, read: “the qualifying
service of an employee retiring voluntarily under this
regulation shall be increased by a person not exceeding …
……” The words “under this regulation” would mean
‘under Regulation 29’ and no other interpretation to the
meaning could be attributed to these words; (iv) that during
operation of VRS 2000, the concerned banks had brought
out circulars to bring to the notice of the concerned
employees the proposed amendment and, thus, the
employees were aware of the proposed amendment of
Pension Regulations and could have withdrawn their offer
but in the absence of such withdrawal and after having
accepted the benefits under VRS 2000, they are estopped
under law from challenging the Scheme or claiming
benefit of addition of five years of notional service in
calculating the length of service for the purposes of
pension and (v) that Regulation 29 does not cover
persons retiring under VRS 2000 which is de hors the
statutory scheme for voluntary retirement.
18
22. On the other hand, on behalf of the
employees, it was contended: (i) that Pension
Regulations, 1995, were framed and notified in the year
1995 that provides for different classes of pension which
might be available to a pension optee, inter alia, two
classes of these pension are; superannuation pension
(Regulation 28) and pension on Voluntary Retirement
(Regulation 29); that VRS 2000 was brought out with the
object of optimizing human resources at various levels for
achieving the balanced age and skills profile in keeping
with business strategies and the banks allowed its
employees to retire voluntarily under the Scheme with an
intention to confer attractive benefits in addition to ex-
gratia and such additional benefits also included pension
as per Pension Regulations, 1995; (ii) that VRS 2000 is
not statutory in nature; rather, it is an invitation to treat by
the bank to its employees to offer for voluntary retirement.
The offer for voluntary retirement was founded on the
terms of scheme. By acceptance of the said offer made
by the employees, the concluded contract came into
existence between the bank and the employee which
19
could not have been altered; (iii) that on the date of the
relieving the concerned employees, Regulation 28 had not
been amended and, therefore, the entitlement to the
pension could not have been decided in terms of that
Regulation and the pension benefits to the optees could
only be given under Regulation 29; (iv) that by making
provision in the Scheme that optees would be eligible for
the benefits in addition to the ex-gratia amount, inter alia,
pension as per Pension Regulations, 1995, the
employees understood that what was contemplated was
pension under Regulation 29. Any ambiguity in VRS
2000 ought to be construed that harmonized with the
intention of the parties; (v) that the amendment in
Regulation 28 was introduced for a class of employees
who had put in more than 15 years but less than 20 years
of service. In terms of Pension Regulations, 1995, as it
stood before amendment to Regulation 28, an employee
although a pension optee under VRS having not completed
20 years service was not entitled to any pension. In order
to take care of this anomalous position and to confer
pensionary benefits on such employees, the amendment
20
was brought into effect in Regulation 28 which cannot
affect the subject employees who undisputedly have put
in more than 20 years of service; (vi) that the employees
made the offer to retire from service in terms of the
Scheme which was accepted by the banks without any
reservation. In terms of the Scheme under the head ‘other
benefits’, the optees are eligible for benefit of pension as
per Pension Regulations, 1995. Regulation 29 was the
only regulation under the Pension Regulations,1995,
applicable to voluntary retirement and, therefore,
Regulation 29, ipso facto, became the term of the contract
and (vii) that each and every paragraph of Regulation 29
can be made applicable to an optee of more than 20 years
of service without coming into conflict with any provision
of the Scheme; the notice period of three months in
Regulation 29(3) can be waived at the discretion of the
banks.
23. The principal question that falls for our
determination is : whether the employees (having
completed 20 years of service) of these banks (Bank of
India, Punjab National Bank, Punjab & Sind Bank, Union
21
Bank of India and United Bank of India) who had opted for
voluntary retirement under VRS 2000 are entitled to
addition of five years of notional service in calculating the
length of service for the purpose of the said Scheme as per
Regulation 29(5) of Pension Regulations, 1995 ?
24. As noticed above, Pension Regulations, 1995,
came to be framed by each of the afore-referred banks
separately in exercise of the powers conferred by clause(f)
of sub-Section 2 of Section 19 of the Act, 1970. In the
interpretation clause various expressions have been
defined.
25. Regulation 2(t) defines ‘pension’:
“pension” includes the basic pension and additionalpension referred to in Chapter VI of these Regulations”.
Regulation 2(y) defines ‘retirement’:
“retirement” means cessation from bank’s service
“(a)…………………
(b) on voluntary retirement in accordance withprovisions contained in Regulations 29 of theseRegulations.
(c)………”
26. Chapter V of Pension Regulations deals
with the various classes of pension:
22
superannuation pension (Regulations 28);
voluntary retirement pension (Regulation 29);
invalid pension (Regulation 30); premature
retirement pension (Regulation 32) and
compulsory retirement pension (Regulation 33).
27. In view of the admitted position that VRS
2000 was a contractual scheme; that it was an
invitation to offer containing a term that optee
will also be eligible for pension as per Pension
Regulations; that an application by an
employee for voluntary retirement was a
proposal or offer and that upon acceptance of
the application for voluntary retirement made by
the employee and a communication of
acceptance to him, the concluded contract
came into existence and the offeree was
relieved from the employment, for
consideration of the question posed herein, the
court need to examine the contract and the
circumstances in which it was made in order
to see whether or not from the nature of it, the
23
parties must have made their bargain on the
footing that a particular thing or state of things
would continue to exist.
28. The true construction of a contract must
depend upon the import of the words used and
not upon what the parties choose to say
afterwards. Nor does subsequent conduct of
the parties in the performance of the contract
affect the true effect of the clear and
unambiguous words used in the contract. The
intention of the parties must be ascertained
from the language they have used, considered
in the light of the surrounding circumstances
and the object of the contract. The nature and
purpose of the contract is an important guide
in ascertaining the intention of the parties.
29. In Ottoman Bank of Nicosia vs. Ohanes
Chakarian, AIR 1938 PC 26, Lord Wright made
these weighty observations:
“----- that if the contract is clear and unambiguous, itstrue effect cannot be changed merely by the course ofconduct adopted by the parties in acting under it.”
24
30. In Ganga Saran vs. Firm Ram Charan Ram
Gopal, AIR 1952 SC 9, a four Judge bench of this Court
stated:
“Since the true construction of an agreement mustdepend upon the import of the words used and notupon what the parties choose to say afterwards, it isunnecessary to refer to what the parties have saidabout it.”
31. It is also a well-recognized principle of
construction of a contract that it must be read as a whole
in order to ascertain the true meaning of its several
clauses and the words of each clause should be
interpreted so as to bring them into harmony with the other
provisions if that interpretation does no violence to the
meaning of which they are naturally susceptible. [(The
North Eastern Railway Company vs. L. Hastings) (1900 AC
260)].
32. The fundamental position is that it is the
banks who were responsible for formulation of the terms
in the contractual Scheme that the optees of voluntary
retirement under that Scheme will be eligible to pension
25
under Pension Regulations, 1995, and, therefore, they
bear the risk of lack of clarity, if any. It is a well-known
principle of construction of contract that if the terms
applied by one party are unclear, an interpretation
against that party is preferred. [Verba Chartarum Fortius
Accipiuntur Contra Proferentum].
33. What was, in respect of pension, the intention
of the banks at the time of bringing out VRS 2000? Was
it not made expressly clear therein that the employees
seeking voluntary retirement will be eligible for pension as
per Pension Regulations? If the intention was not to give
pension as provided in Regulation 29 and particularly sub-
regulation (5) thereof, they could have said so in the
scheme itself. After all much thought had gone into the
formulation of the VRS 2000 and it came to be framed
after great deliberations. The only provision that could
have been in mind while providing for pension as per
Pension Regulations was Regulation 29. Obviously, the
employees, too, had benefit of Regulation 29(5) in mind
when they offered for voluntary retirement as admittedly
Regulation 28 as was existing at that time was not
26
applicable at all. None of the regulations 30 to 34 was
attracted. It appears that VRS 2000 evoked huge
response, much more than expected and then began the
second thought. At the fag end of operation of VRS
2000, at the instance of NBA, the banks proposed
amendment in the Pension Regulations and a circular
came to be issued. But, by that time, ball had gone out of
the hands of the employees; they had already made their
offers which were irrevocable; it was not open to them to
withdraw the offers as per specific condition incorporated
in the scheme (albeit this court in O.P. Swarnakar held
that offer could be withdrawn before acceptance) and
their offers were accepted and they were relieved. We
are afraid, it would be unreasonable if amended
Regulation 28 is made applicable, which had not seen the
light of the day and which was not the intention of the
bank when scheme was framed. The banks in the
present batch of appeals are public sector banks and are
‘State’ within the meaning of Article 12 of the Constitution
and their action even in contractual matters has to be
reasonable, lest, as observed in O.P. Swarnakar, it must
27
attract the wrath of Article 14 of the Constitution.
34. Any interpretation of the terms of VRS 2000,
although contractual in nature, must meet the test of
fairness. It has to be construed in a manner that avoids
arbitrariness and unreasonableness on the part of the
public sector banks who brought out VRS 2000 with an
objective of rightsizing its manpower. The banks decided
to shed surplus manpower. By formulation of the
Special Scheme (VRS 2000), the banks intended to
achieve its objective of rationalizing its force as they were
overstaffed. The Special Scheme was, thus, oriented to
lure the employees to go in for voluntary retirement. In
this background, the consideration that was to pass
between the parties assumes significance and a
harmonious construction to the Scheme and Pension
Regulations, therefore, has to be given.
35. The amendment to Regulation 28 can, at best,
be said to have been intended to cover the employees
with 15 years of service or more but less than 20 years of
service. This intention is reflected from the
communication dated September 5, 2000 sent by the
28
Government of India, Ministry of Finance, Department of
Economic Affairs (Banking Division) to the Personnel
Advisor, Indian Banks’ Association. The said letter may be
set out as it is which reads thus:
“F.No.4/8/4/2000-IR
Government of IndiaMinistry of FinanceDepartment of Economic Affairs(Banking Division)
New Delhi, the 5th Sept.2000
ToThe Personnel Advisor, Indian Bank’s Association, Mumbai.
Sub: Amendment to Regulation 29 of the Pension Regulations.
Sir,
I am directed to refer to this Division’s letter No.11/1/99 IR dated 29th August, 2000 conveyingGovernment’s no objection for circulation of VoluntaryRetirement Scheme in Public Sector Banks. Thescheme, inter-alia, provides that employees with 15years of service or 40 years of age shall be eligible totake voluntary retirement under the scheme. As perprovisions contained in Regulation 29 of PensionRegulations an employee can take voluntaryretirement after 20 years of qualifying service andthereafter becomes eligible for pension. Thusemployees having rendered 15 years of service orcompleting 40 years of age but not having completed20 years of service shall not be eligible for pensionarybenefits on taking voluntary retirement under thescheme.
In order to ensure that such employees do notlose the benefit of pension, IBA may work out
29
modalities and suggest amendments, if any, requiredto be made in the pension regulations to ensure thatthese employees also get the benefit of pension.
Yours faithfully,Sd/-
(U.P. Singh)Director (IR)”
36. Two things immediately become noticeable
from the said communication. One is that as per
Regulation 29 of Pension Regulations, 1995, an employee
can take voluntary retirement after 20 years of qualifying
service and become eligible for pension. The other thing is
that the Scheme provides that the employees with 15 years
of service or 40 years of age shall be eligible to take
voluntary retirement under the Scheme and under
Regulation 29, the employees having rendered 15 years of
service or completed 40 years of age but not completed
20 years of service shall not be eligible for pensionary
benefits on taking voluntary retirement under the Scheme.
The use of the words ‘such employees’ in the
communication is referable to employees having rendered
15 years of service but not completed 20 years of service
and, therefore, it was decided to bring in amendment in
30
the Regulations so that employees having not completed
20 years service do not loose the benefit of pension. The
amendment in Regulation 28, as is reflected from the
afore-referred communication, was intended to cover the
employees who had rendered 15 years service but not
completed 20 years service. It was not intended to cover
the optees who had already completed 20 years service
as the provisions contained in Regulation 29 met that
contingency.
37. Even if it be assumed that by insertion of the
proviso in Regulation 28 (in the year 2002 with effect from
September 1, 2000), all class of employees under VRS
2000 were intended to be covered, such amendment in
Regulation 28, needs to be harmonized with Regulation 29,
particularly Regulation 29(5) which provides for addition of
qualifying service by five years for the optees who had put
in 20 years service or more subject to the condition that
total qualifying service rendered by such employee shall
not in any case exceed 33 years. This would be in tune
and consonance with the explanatory note appended to
the amendment in Regulation 28 wherein it is stated that
31
the amendment with retrospective effect would not
adversely affect any employee or officer of the respondent-
bank. That would also meet the test of fairness.
38. The contention was raised on behalf of the
banks that if Regulation 29(5) of the Pension Regulations,
1995, is applied for the purposes of VRS 2000, the same
would create an anomalous situation inasmuch as two
different classes of employees for the purpose of granting
pension would be created, namely, a class of employees
who had completed 15 years of service but less than 20
years of service and this class would not be entitled to
receive benefits under Regulation 29(5) while the
employees who had completed 20 years service or more
would be entitled to receive the benefit under Regulation
29(5). It was submitted that by such construction a class
within the class would be created which is impermissible.
We do not agree. If a special benefit under Regulation
29(5) is available to the employees who had completed 20
years of service or more, by no stretch of imagination, can
it be said that it is discriminatory to those employees who
had completed 15 years of service but not completed 20
32
years. In view of the provision contained in Regulation 29
(5), if the optees who have not completed 20 years get
excluded from the weightage of five years which has been
given to optees who have completed 20 years of service
or more, it is no discrimination. Such provision can
neither be said to be arbitrary nor can be held to be
violative of any constitutional or statutory provisions. The
weightage of five years under Regulation 29(5) is
applicable to the optees having service of 20 years or
more. There is, thus, basis for additional benefit.
Merely because the employees who have completed 15
years of service but not completed 20 years of service are
not entitled to weightage of five years for qualifying
service under Regulation 29(5), the employees who have
completed 20 years of service or more cannot be denied
such benefit.
39. On behalf of the banks, it was contended that
Pension Regulations, 1995, are statutory in nature and
these Regulations cannot be altered, amended or read
down in view of any contract or a contractual scheme. It
was submitted that any contract (or contractual scheme),
33
contrary to a statutory law would be hit by Section 23 of
the Contract Act and, therefore, it is the contract or the
scheme which has to be modified, altered or read down to
bring it in tune with the provisions of statutory Regulations
and not the other way round. The contention does not
impress us. It is misplaced assumption that by reading
Regulation 29(5) in the Scheme, the Pension Regulations
would get altered or amended. Can it be said that
statutory relationship of employee and employer brought
to an end prematurely by contractual VRS 2000
amounted to alteration or amendment in the statutory
Regulations. Surely, answer has to be in negative and
that must answer this contention. The precise effect of
Pension Regulations, for the purposes of pension, having
been made part of scheme, is that Pension Regulations,
to the extent, these are applicable, must be read into the
Scheme. It is pertinent to bear in mind that interpretation
clause of VRS-2000 states that the words and
expressions used in the scheme but not defined and
defined in the Rules/Regulations shall have the same
meaning respectively assigned to them under
34
Rules/Regulations. The Scheme does not define the
expression ‘retirement’ or ‘voluntary retirement’. We have,
therefore, to fall back on the definition of ‘retirement’
given in Regulation 2(y) whereunder voluntary retirement
under Regulation 29 is considered to be retirement.
Regulation 29 uses the expression, ‘voluntary retirement
under these Regulations’. Obviously, for the purposes of
the Scheme, it has to be understood to mean with
necessary changes in points of details. Section 23 of the
Contract Act has no application to the present fact
situation.
40. It was submitted on behalf of the banks that
amendment to Regulation 28 has neither been challenged
nor the said Regulation has been declared ultra vires and,
therefore, that provision cannot be rendered otiose by
taking recourse to Regulations 29. It is true that validity
and legality of Regulation 28 has not been put in issue. It
was apparently not done because, according to the
employees, amended Regulation 28 although made
retrospective could not have affected the concluded
contract. We have already indicated above as to how the
35
amendment in Regulation 28 in the year 2002 with effect
from September 1, 2000 could not have applied to the
optees under the Scheme who had completed service of
20 years. Lack of challenge to the Regulation 28 by the
employees is, therefore, not very material. It is not correct
to say that by taking recourse to Regulation 29, the
amendment to Regulation 28 is rendered otiose.
41. It was vehemently contended on behalf of the
banks that VRS 2000 was a self-contained Scheme and it
provided for special benefits in the form of ex-gratia. It
was submitted that ex-gratia was not available to the
employees claiming voluntary retirement under Pension
Regulations and it was because of that, that Scheme did
not envisage granting of pension benefits under Regulation
29(5) of the Pension Regulations, 1995, along with the
payment of ex-gratia which was a substantial amount. It is
true that VRS 2000 is a complete package in itself and
contractual in nature. However, in that package, it has
been provided that the optees, in addition to ex-gratia
payment, will also be eligible to other benefits inter alia
pension under the Pension Regulations. The only
36
provision in the Pension Regulations at the relevant time
during the operation of VRS 2000 concerning voluntary
retirement was Regulation 29 and clause(5) thereof
provides for weightage of addition of five years to
qualifying service for pension to those optees who had
completed 20 years service. It, therefore, cannot be
accepted that VRS 2000 did not envisage grant of pension
benefits under Regulation 29(5) of the Pension
Regulations, 1995, to the optees of 20 years service along
with payment of ex-gratia. The whole idea in bringing out
VRS 2000 was to rightsize workforce which the banks
had not been able to achieve despite the fact that the
statutory Regulations provided for voluntary retirement to
the employees having completed 20 years service. It was
for this reason that VRS 2000 was made more attractive.
VRS 2000, accordingly, was an attractive package for the
employees to go in for as they were getting special
benefits in the form of ex-gratia and in addition thereto,
inter alia pension under the Pension Regulations which
also provided for weightage of five years of qualifying
service for the purposes of pension to the employees who
37
service for the purposes of pension to the employees who
had completed 20 years service.
42. In support of their contention that the
employees, who have sought voluntary retirement under
VRS 2000, are not entitled to benefit of Regulation 29(5)
of Pension Regulations, 1995, on behalf of banks, heavy
reliance was placed on a decision of this Court in the
case of Bank of Baroda and Ors. Vs. Ganpat Singh
Deora, 2009 (1) Scale 168. As a matter of fact, it was
submitted that the decision of this Court in the case of
Bank of Baroda concludes the controversy and the legal
position is no more res integra. Reliance in this
connection was placed on the following observations:
“15. The only question which is required to bedetermined in the instant case is whether Regulation 29of the Pension Regulations, 1995, could have beenapplied in the case of the respondent or whetherRegulation 14 has been rightly applied both by theTribunal and the High Court.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18. However, we are inclined to agree with Ms.Bhati that Regulation 29 does not contemplatevoluntary retirement under the Voluntary RetirementScheme and applies only to such employees whothemselves wish to retire de hors any Scheme ofVoluntary Retirement, after having completed 15 yearsof qualifying service for the said purpose. There is adistinct difference between the two situations and
38
Regulation 29 would not cover the case of an employeeopting to retire on the basis of a Voluntary RetirementScheme.
19. Furthermore, Regulations 2 of the VoluntaryRetirement Scheme, 2001, of the appellant-Bankmerely prescribes a period of qualifying service for anemployee to be eligible to apply for voluntaryretirement. On the other hand, Regulations 14 and 29of the Pension Regulations, 1995, relate to the periodof qualifying service for pension under the saidRegulations, in two different situations. WhileRegulations 14 provides that in order to be eligible forpension an employee would have to render a minimumof 10 years service, Regulation 29 is applicable to theemployees choosing to retire from service pre-maturely,and in their case the period of qualifying service wouldbe 15 years. The facts of this case, however, do notattract the provisions of Regulation 29 since therespondent accepted the offer of voluntary retirementunder the Scheme framed by the Bank and not on hisown volition de hors any Scheme of VoluntaryRetirement. In such a case, Regulaion14 read withRegulation 32 providing for premature retirement wouldnot also apply to the case of the respondent. WhileRegulation 2 of the BOBEVRS -2001 speaks ofeligibility for applying under the Scheme, Regulation 14of the Pension Regulations, 1995, contemplates asituation whereunder an employee would be eligible forpremature pension. The two provisions are for twodifferent purposes and for two different situations.However, Regulations 28 of the Pension Regulations,1995, after amendment made provision for situationssimilar to the one in the instant case. In the absence ofany particular provision for payment of pension to thosewho opted for BOBEVRS-2001 other than Regulation11(ii) of the Scheme, we are once again left to fall backon the Pension Regulations, 1995, and the amendedprovisions of Regulation 28 which brings within thescope of Superannuation Pension employees whoopted for the Voluntary Retirement Scheme, which willbe clear from the Explanatory Memorandum. However,the period of qualifying service has been retained as 15years for those opting for BOBEVRS-2001 and istreated differently from premature retirement where theminimum period of qualifying service has been fixed at10 years in keeping with Regulation 14 of the PensionRegulations, 1995.”
39
43. A word about precedents, before we deal with
the aforesaid observations. The classic statement of
Earl of Halsbury , L.C. in Quinn vs. Leathem, 1901 AC
495, is worth recapitulating first:
“Before discussing Allen v. Flood (1898) AC 1 andwhat was decided therein, there are two observationsof a general character which I wish to make; and one isto repeat what I have very often said before –thatevery judgment must be read as applicable to theparticular facts proved, or assumed to be proved, sincethe generality of the expressions which may be foundthere are not intended to be expositions of the wholelaw, but are governed and qualified by the particularfacts of the case in which such expressions are to befound. The other is that a case is only an authority forwhat it actually decides. I entirely deny that it can bequoted for a proposition that may seem to followlogically from it. Such a mode of reasoning assumesthat the law is necessarily a logical code, whereasevery lawyer must acknowledge that the law is notalways logically at all.”
44. This Court has in long line of cases followed
the aforesaid statement of law. In State of Orissa vs.
Sudhansu Sekhar Misra, AIR 1968 SC 647, it was
observed:
40
“…. A decision is only an authority for what it actuallydecides. What is of the essence in a decision is itsratio and not every observation found therein nor whatlogically follows from the various observations made init.”
45. In the words of Lord Denning:
“Each case depends on its own facts and a closesimilarity between one case and another is not enoughbecause even a single significant detail may alter theentire aspect, in deciding such cases, one should avoidthe temptation to decide cases (as said by Cardozo)by matching the colour of one case against the colourof another. To decide therefore, on which side of theline a case falls, the broad resemblance to anothercase is not at all decisive.”
46. It was highlighted by this Court in Ambica Quarry
Works Vs. State of Gujarat,(1987) 1 SCC 213:
“18….The ratio of any decision must be understood inthe background of the facts of that case. It has beensaid long time ago that a case is only an authority forwhat it actually decides, and not what logically followsfrom it.”
47. In Bhavnagar University vs. Palitana Sugar Mill
(P) Ltd., (2003) 2 SCC 111, this Court held that a little
difference in facts or additional facts may make a lot of
difference in the precedential value of a decision.
41
48. This Court in Bharat Petroleum Corporation
Ltd. vs. N.R. Vairamani, (2004) 8 SCC 579, emphasized
that the Courts should not place reliance on decisions
without discussing as to how the factual situation fits in
with the fact situation of the decision on which the reliance
is placed. It was further observed that the judgments of
courts are not to be construed as statutes and the
observations must be read in the context in which they
appear to have been stated. The Court went on to say
that circumstantial applicability, one additional or different
fact may make a word of difference between conclusions
in two cases.
49. It is true that the controversy in the case of
Bank of Baroda arose out of the same voluntary retirement
scheme with which we are concerned in this group of
appeals. However, there is vital factual difference in that
case and this group of appeals. Pertinently that was a
case where the employee had completed only 13 years of
service( not even 15 years of service much less 20 years’
service) although he completed 40 years of age at the time
he offered for voluntary retirement. The employee’s
42
application therein for voluntary retirement was accepted
by the Bank of Baroda and he was paid all retiral benefits.
However, his request for grant of pension in addition to
the other retiral benefits was not acceded to by the bank.
It was so because he had not completed even 15 years of
service. The employee pursued industrial adjudicatory
process for redressal of his grievance in respect of
non-grant of pension by the bank. The employee’s claim
was opposed by the Bank of Baroda contending that in
terms of Regulations 14, 28 and 29 of the Pension
Regulations, 1995, the employee was not entitled to
pension. The observations made by this Court in Bank of
Baroda which have been quoted above and relied upon by
the banks in support of their contention have to be
understood in the factual backdrop namely, that the
employee had completed only 13 years of service and,
was not eligible for the pension under the Pension
Regulations,1995 and for the benefit of addition of five
years to qualifying service under Regulation 29(5), an
employee must have completed 20 years of service. The
question therein was not identical in form with the
43
question here to be decided. The following observations
in paragraph 11 of the report in Bank of Baroda are
significant:
“……since both the Tribunal as well as the High Courtappear not to have considered or taken note of the factthat the respondent was not eligible for pension as hehad not completed 15 years of qualifying service………….”
50. The decision of this Court in Bank of Baroda
is, thus, clearly distinguishable as the employee therein
had not completed qualifying service much less 20 years of
service for being eligible to the weightage under
Regulation 29(5) and cannot be applied to the present
controversy nor does that matter decide the question here
to be decided in the present group of matters.
51. On behalf of banks it was submitted that the
employees, having taken benefits under the scheme (VRS
2000), are estopped from raising any issue that their
entitlement to pension would not be covered by amended
Regulation 28. It was suggested that the employees
having taken benefit of the scheme cannot insist for
44
pension under Regulation 29(5). O.P. Swarnakar was
relied upon in this regard wherein it has been held that an
employee, having taken the ex-gratia payment, or any
other benefit under the scheme cannot be allowed to resile
from the scheme.
52. Insofaras the present group of appeals is
concerned, the employees are not seeking to resile from
the Scheme. They are actually seeking enforcement of the
clause in the Scheme that provides that the optees will be
eligible for pension under the Pension Regulations, 1995.
According to them, they are entitled to the benefits of
Regulation 29(5). In our considered view, plea of
estoppel is devoid of any substance; as a matter of fact it
does not arise at all in the facts and circumstances of the
case.
53. We hold, as it must be, that the employees who
had completed 20 years of service and were pension
optees and offered voluntary retirement under VRS 2000
and whose offers were accepted by the banks are
entitled to addition of five years of notional service in
calculating the length of service for the purposes of that
45
Scheme as per Regulation 29(5) of the Pension
Regulations, 1995. The contrary view expressed by some
of the High Courts do not lay down the correct legal
position.
54. The only question now remains to be seen is
whether the concerned employees are entitled to interest
on unpaid pension.
55. Although it has been held by us that the subject
employees are entitled to the weightage in terms of
Regulation 29(5) of Pension Regulations, 1995, but we are
satisfied that any award of interest on unpaid pension
would not be in the interest of justice. It is so because
different High Courts did not have unanimous judicial
opinion on the issue. Punjab and Haryana High Court
and the Division Bench of the Kerala High Court upheld the
contention of the employees with regard to applicability of
Regulation 29(5) to the optees who had completed 20
years of service while the Division Bench of the Calcutta
High Court and a single Judge of the Kerala High Court
took exactly an opposite view. The stance of the banks,
46
although found not meritorious, cannot be said to be
totally frivolous. We, accordingly, hold that the subject
employees are not entitled to interest on unpaid pension.
56. The result of the foregoing discussion is that
the appeals preferred by the banks must fail and are
dismissed while the appeals of the employees deserve to
be allowed and are allowed accordingly. The respective
banks shall now recalculate, within one month from today,
the pension payable to the concerned employees by
giving them the benefit of Regulation 29(5). However, the
employees shall not be entitled to interest on unpaid
pension. The pending applications in these appeals
stand disposed of. The parties shall bear their own costs.
…………………………..J(D.K. Jain)
…………………………..J(R.M. Lodha)
New Delhi,March 27, 2009
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48